Author Topic: Is it a dumb idea to get a real estate license on the side?  (Read 8452 times)

IowaStache

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Is it a dumb idea to get a real estate license on the side?
« on: April 10, 2014, 08:19:47 AM »
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« Last Edit: June 10, 2016, 08:04:04 AM by IowaStache »

arebelspy

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #1 on: April 10, 2014, 08:34:19 AM »
Depends on why you're doing it.

Real estate agent is a job completely separate from real estate investor.

If you want a second job, like hard work and people, it's not a terrible one.  There are better ones if you are a good salesman and marketer though.

It has very little overlap with real estate investing, especially part time investing.  It is more useful if you're going to do real estate investing full time as a business.

Quote
I've always been interested in real estate but don't want to purchase a property to rent out or flip.

Renting out properties or flipping them are the two most common strategies.  You don't want to do either of those, so what do you want to do with real estate?

Since you don't seem interested in real estate investing, it sounds like the license would go from "slightly pointless" to "completely pointless."

What would be your motivation for getting a license?
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totoro

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #2 on: April 10, 2014, 09:10:47 AM »
I had thought about this a number of years ago, but the internet has really changed things. 

Finding good deals is about knowing your market, knowing real estate costs/components and having access to electronic data to start the search.  While this is part of what you would learn as a real estate agent, you can learn it yourself through research online and some legwork.   

My opinion is that real estate agents are becoming less useful and the profession will decline due to greater access to information online and the trend towards FSBO.  I purchased two properties directly from the seller myself.   

Whether the license is useful to you depends on your ability to generate compensation that justifies the time and effort to get and maintain the license and associated marketing materials.   

However, you might be very well connected in your community so it might pay off right away as a number of people might be willing to list with you based on personal relationships.  In this scenario it might pay for itself.


arebelspy

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #3 on: April 10, 2014, 09:21:49 AM »
Out of curiosity - why are they relatively so unrelated?  To me it would seem like having a license and (eventually) working on your own would alert you to investment properties and cut closing costs in the future.  Is that wrong?

An agent helps others buy and sell homes, primarily as owner occupants. They need skills around that.

An investor looks at numbers.  They have completely different criteria, and don't necessarily need to "sell" nearly as much (sometimes, of course, everyone has to sell, such as certain strategies which revolve around direct contact with distressed homeowners).

They both have to do with real estate, but the skills in doing real estate investing and being a real estate agent have a fairly small overlap in their Venn diagram.

It's easier, cheaper, and faster to learn those skills (comping properties is one example) without a license.

Agents are great.  They're just a separate thing from investors, and every investor knows it.

As totoro said, if you know a lot of people who would list with you, it could pay for itself.  But again, it's a job, not investing, and it will help you less with investing than you'd think, unfortunately.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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DoubleDown

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #4 on: April 10, 2014, 09:51:08 AM »
Just want to add to the chorus that you don't need a real estate license to be an investor; it would be an unnecessary expense and would not really give you the tools to be an effective investor anyway. But if you want a full time job (or near full time) to help people buy and sell real estate and get a commission for doing so then, yes, you will need a real estate license. I don't think there should be such a thing as getting a real estate license "on the side", or at least there's no useful purpose to it I can think of.

ingrownstudentloans

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #5 on: April 10, 2014, 10:06:54 AM »
I don't think there should be such a thing as getting a real estate license "on the side", or at least there's no useful purpose to it I can think of.

I cannot disagree more, sorry, DoubleDown, though my situation is unique. 

I got my real estate broker's license in NY last year to help a friend who was looking to buy.  As an attorney in New York, I simply applied with the Dept. of State and paid $150 for the license; I did not have to take any of the classes or jump through any other hoops.   

My friend's offer was accepted on Friday and she is now under contract.  I stand to make about $4,500 from my $150 investment in a couple of months when she closes (barring any setbacks).  In addition, I learned more about the real estate market in my area, and I made some great contacts. 

I am about to start working with another friend who is in a similar boat (no real time crunch and interested in looking at lots of properties when I am available).

Once my student loans are paid off and I am able to start investing in properties myself, I can factor in a 2.5% savings on any offer that I make, knowing that money will be returned to me at closing.  I only wish I had known about this when I bought my current duplex.

I think there are certain situations when getting a license "on the side" makes sense.  For me, the ease of getting the license with the low cost was a no brainer.  Even if my friend ended up not buying a house, I could only lose $150. 

To the OP - do it, worse thing that happens, you get a license that sits in a drawer, you never use it, and it expires. 

arebelspy

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #6 on: April 10, 2014, 10:36:50 AM »
To the OP - do it, worse [sic] thing that happens, you get a license that sits in a drawer, you never use it, and it expires.

No, the worst (realistic) thing that happens is you waste lots of time and money getting it, then continually renewing it because it'll be useful "someday."  The thing is, that scenario isn't a far-fetched negative one, it's the median scenario - i.e. that's what happens to most agents.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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totoro

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #7 on: April 10, 2014, 10:55:13 AM »
ingrownstudentloans  your situation is indeed unique in that you need to be a lawyer first to qualify for this route. 

In my province in Canada I, as a lawyer, am able to sell real estate and profit from a commission fee without any other fees than the fees I pay as a lawyer to the law society. 

Until recently, the holdback on this was that lawyers could not list on the realtor.ca website - only licensed realtors could.  This has changed as a result of a competition suit which opened up the realtor.ca site to anyone who pays a fee.  This change also meant that individual sellers could list without an agreement to pay commission to a realtor or lawyer - a flat fee for a "mere listing" was possible.  This has not caught on fully yet. 

In any event, some lawyers in Canada have taken up the full service real estate practice (listing as well): http://propertyshop.ca/

For the OP, the licensing aspect may not be worth it.  In Canada it is my belief that the need for full commission realtors has plummeted due to the internet and ability of an individual to list on the realtor.ca site without engaging a full commission realtor.

ingrownstudentloans

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #8 on: April 10, 2014, 10:57:04 AM »
To the OP - do it, worse [sic] thing that happens, you get a license that sits in a drawer, you never use it, and it expires.

No, the worst (realistic) thing that happens is you waste lots of time and money getting it, then continually renewing it because it'll be useful "someday."  The thing is, that scenario isn't a far-fetched negative one, it's the median scenario - i.e. that's what happens to most agents.

I guess some people value experience and experiences. 

As for the use of "[sic]" in the quote, are we really at the point where we have to point out where someone made a grammatical error in a blog post.  By doing so, I assume that you are trying to do one of two things, either (1) establish some sort of internet police style superiority in your post, or (2) make clear to the world (read: this blog) that the mistake was not yours.  If the former, congrats, you win this one.  If the latter, the highlighted part of the post signifies that you are quoting a section of text from an earlier post, nobody will think you screwed it up. (ended a sentence with a hanging preposition - mistake in original).  I personally do not think we need to be [sic]'ing here...it might lead to other pointless interweb attacks such as:

- i.e. that's what happens to most agents.

CITATION?

I always thought reasonable minds could disagree on reasonable things.  Let's leave it up to the OP to decide if he really wants the experience and the possibility of using a license for his own purchases later, or if he is content using an agent and giving up that commission and having no chance of getting into a side-hustle gig that he might enjoy.  I merely wanted to throw in my personal experience with getting a real estate license "on the side" that, if all goes well, will result in a 29% ROI in less than 1 year. 


arebelspy

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #9 on: April 10, 2014, 11:01:39 AM »
Calm down.  My disagreeing was not a personal attack in any way. Sorry you took it that way.

I'll work on getting that citation later.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

arebelspy

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #10 on: April 10, 2014, 11:40:51 AM »
Managing is an interesting side idea.  Depending on the state you need a license for that, and if you're planning on becoming a landlord it could give you some good experience for that.

More lucrative, IMO, than a regular "agent" type job (being an awesome salesman/marketer aside).
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

DoubleDown

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #11 on: April 10, 2014, 12:37:22 PM »
I don't think there should be such a thing as getting a real estate license "on the side", or at least there's no useful purpose to it I can think of.

I cannot disagree more, sorry, DoubleDown, though my situation is unique. 

I got my real estate broker's license in NY last year to help a friend who was looking to buy.  As an attorney in New York, I simply applied with the Dept. of State and paid $150 for the license; I did not have to take any of the classes or jump through any other hoops.   


I should have clarified when I paraphrased about "getting a license on the side" that I was assuming the more usual scenario like the OP's where a person takes several classes and eventually sits for and passes the tests to get a license, pays to get aligned with a realtor/broker, etc. etc. As a practicing real estate attorney with all the requisite knowledge already, just paying the $150 fee for the license in order to score that $4500 commission definitely makes sense! That's great you are able to capitalize further on your expertise!

dragoncar

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #12 on: April 10, 2014, 03:25:42 PM »
As an attorney in New York, I simply applied with the Dept. of State and paid $150 for the license; I did not have to take any of the classes or jump through any other hoops.   

Woah!  Thanks for point this out.  How did I not know this?

arebelspy

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #13 on: April 10, 2014, 03:54:49 PM »
As an attorney in New York, I simply applied with the Dept. of State and paid $150 for the license; I did not have to take any of the classes or jump through any other hoops.   

Woah!  Thanks for point this out.  How did I not know this?

That is a neat trick.

Be careful though, since when you have your license you'll be responsible for following all the legal requirements, and if you aren't familiar with what those are exactly since you didn't take the classes, you might step in it.  You can likely research them on your own though.  Just something to be aware of.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

dragoncar

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #14 on: April 10, 2014, 04:14:43 PM »
As an attorney in New York, I simply applied with the Dept. of State and paid $150 for the license; I did not have to take any of the classes or jump through any other hoops.   

Woah!  Thanks for point this out.  How did I not know this?

That is a neat trick.

Be careful though, since when you have your license you'll be responsible for following all the legal requirements, and if you aren't familiar with what those are exactly since you didn't take the classes, you might step in it.  You can likely research them on your own though.  Just something to be aware of.  :)

Eh, it looks like I'd need 2 years experience to become a broker... so not sure how much commission I'd get back on a home purchase.  Like, I'd have to get a job with a broker to get access to MLS and get a commission?  Might be better to dangle the double-ended deal in front of the selling agent.

totoro

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #15 on: April 10, 2014, 04:17:18 PM »
As an attorney in New York, I simply applied with the Dept. of State and paid $150 for the license; I did not have to take any of the classes or jump through any other hoops.   

Woah!  Thanks for point this out.  How did I not know this?

That is a neat trick.

Be careful though, since when you have your license you'll be responsible for following all the legal requirements, and if you aren't familiar with what those are exactly since you didn't take the classes, you might step in it.  You can likely research them on your own though.  Just something to be aware of.  :)

Yes, although I don't think the warning is necessary.  Lawyers get trained on professional responsibility very thoroughly.  We are not permitted to practice in an area we are not competent in and no lawyer wishes to face their bar society.  As far as the professional responsibility of a realtor to a client, it is a fair bit less complicated than the legal requirements for conveyancing and advising on purchases imo.

dragoncar

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #16 on: April 10, 2014, 04:47:11 PM »
As an attorney in New York, I simply applied with the Dept. of State and paid $150 for the license; I did not have to take any of the classes or jump through any other hoops.   

Woah!  Thanks for point this out.  How did I not know this?

That is a neat trick.

Be careful though, since when you have your license you'll be responsible for following all the legal requirements, and if you aren't familiar with what those are exactly since you didn't take the classes, you might step in it.  You can likely research them on your own though.  Just something to be aware of.  :)

Yes, although I don't think the warning is necessary.  Lawyers get trained on professional responsibility very thoroughly.  We are not permitted to practice in an area we are not competent in and no lawyer wishes to face their bar society.  As far as the professional responsibility of a realtor to a client, it is a fair bit less complicated than the legal requirements for conveyancing and advising on purchases imo.

I would probably only use it to purchase my own place for a cut of the commission

totoro

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #17 on: April 10, 2014, 04:56:45 PM »
That is smart.  I like how you think.  This could be used for friends too and you could simply give them the money.

arebelspy

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #18 on: April 10, 2014, 05:02:04 PM »
Yes, although I don't think the warning is necessary.  Lawyers get trained on professional responsibility very thoroughly.  We are not permitted to practice in an area we are not competent in and no lawyer wishes to face their bar society.  As far as the professional responsibility of a realtor to a client, it is a fair bit less complicated than the legal requirements for conveyancing and advising on purchases imo.

I agree, it just never hurts to throw out a friendly warning.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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Fishingmn

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #19 on: April 12, 2014, 07:25:42 AM »
Out of curiosity - why are they relatively so unrelated?  To me it would seem like having a license and (eventually) working on your own would alert you to investment properties and cut closing costs in the future.  Is that wrong?

An agent helps others buy and sell homes, primarily as owner occupants. They need skills around that.

An investor looks at numbers.  They have completely different criteria, and don't necessarily need to "sell" nearly as much (sometimes, of course, everyone has to sell, such as certain strategies which revolve around direct contact with distressed homeowners).

They both have to do with real estate, but the skills in doing real estate investing and being a real estate agent have a fairly small overlap in their Venn diagram.

It's easier, cheaper, and faster to learn those skills (comping properties is one example) without a license.

Agents are great.  They're just a separate thing from investors, and every investor knows it.

As totoro said, if you know a lot of people who would list with you, it could pay for itself.  But again, it's a job, not investing, and it will help you less with investing than you'd think, unfortunately.

Disagree with some of this (I'm a Realtor and investor).

Comping properties is WAY easier with access to MLS. The search options/variables available are much more comprehensive then what is available to outside tools.

But most importantly, unless you are using MLS you actually have the comps all wrong (in my opinion). In my market over 50% of all deals include seller paid closing costs. I'm a strong believer that the "real" sales price of a house is the net price after taking out the seller paid closing costs since that's the price the seller received. If you aren't using MLS you don't have access to that data. For anyone pulling their sales price data from another tool you will be overestimating the sales price by 3% on over half the homes sold.

Other advantages -

- Access: I can get access to any listing at any time and can very easily go see dozens of properties on short notice to see what's out there

- Commission: I've earned $15k in commissions (after broker split) on the properties I've purchased which helps improve my ROI

- Future business: I have a deal with all of my tenants that they can cancel their 12 month lease at any time if they use me as their Realtor to buy a house. So far 4 tenants have done that which has earned another $15k in commissions

That said, there are a lot of other costs involved with being a Realtor (broker fees, MLS fees, association fees, E&O insurance, training) so it probably isn't worth it unless you also will find additional buyers/sellers to work with unless you have a large volume of investor transactions.

arebelspy

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Re: Is it a dumb idea to get a real estate license on the side?
« Reply #20 on: April 12, 2014, 08:52:30 AM »
That said, there are a lot of other costs involved with being a Realtor (broker fees, MLS fees, association fees, E&O insurance, training) so it probably isn't worth it unless you also will find additional buyers/sellers to work with unless you have a large volume of investor transactions.

This was exactly my bottom line point as well. There are advantages, such as the ones you mention, and others.  But even with those it is generally not worth it unless you also work with others to buy/sell homes (a job, not investing) or have a real estate business so you do a lot of your own investor transactions. I think we're in complete agreement.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.